This paper is to investigate the reasons why industrial revolution did not occur, or didn't occur in China by using a traditional factor analysis and a cause-and-effect logic. The basic conclusion of this paper is that the technology, labor and capital are three main preconditions and components of the industrial revolution and among them, the weak in technology is the fatal factor for the absence of modern industry in China, while labor and capital did not conduce to severe obstacle against China's possible industrialization.
The ideology of this paper is not Euro-centric for its consent on China's parallel socio-economic condition with Europe before 1800. Nor I am convinced of the necessity of a wide comparison of every aspect of economic and political changes between two civilization systems.
As the logic behind "differences alone cannot create comparability", not every piece of history over a thousand years can be responsible for the generation of industrial revolution.
Because of the lack of an accurate social model for quantitative simulation, comparisons may only have reference value but not decisive significance
For example, even it is proved that China was weaker in every aspect than Europe, we still cannot rule out the possibility that industrial revolution may take place in China. But when analyzing China, comparisons with Europe may help provide us valuable references for a better understanding of the preconditions of industrial revolution.
Thus the purpose of comparison should not be win-or-lose judgment, but should be the establishment of axis for reference and a better plot of the situation.
Industrial revolution: what makes it?
The industrial revolution was symbolized by wide use of big machinery and factories. Only this new-born input factor could magnify the existing productivity, assemble the dispersive (free) labor and capital.
Without big machinery, the excess labor would increase the unemployment and create environmental and social pressure; the flourish of silver exploited from colonials could not change into capital needed for the economic development but flow to luxurious upper class life.
An example of a waste of gold was Spain, or more exactly, the Europe before seventeenth century. Between 1500 and 1650 there were estimated 181 tons of gold and 16,000 tons of silver reached Europe from America officially, which means further very large quantities must have arrived by contraband.
The King of Spain needed this silver to meet his expenses in war, and Europe's mercantile community needed it to lubricate its transactions and to provide a means of paying for luxuries from India and the East. But neither of these activities could give us a perspective of an improvement in economic productivity because apparently those large abundant of capital was consumed instead of being put into reproduction area. However, in contradiction the flourishing factories and machineries pointed out explicitly where the capital was spent on in England. Thus it can be expected that a surplus of capital needs investment-friendly environment and institutional support to contribute to an economic flourish. Otherwise the community "may have been an empty shell by economic criteria".